The Cyclical Deficit Is the Portion of the Deficit

question 46

Multiple Choice

The cyclical deficit is the portion of the deficit

• A) the result of discretionary federal spending.
• B) that is the result of nondiscretionary federal spending.
• C) created by fluctuations in real GDP.
• D) that would exist if the economy were at potential real GDP.

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Definitions:

Fixed Selling

Fixed selling refers to the portion of selling costs that remains unchanged regardless of the volume of goods or services sold.

Financial Advantage

A benefit or edge gained in financial terms, such as lower costs, higher revenues, or investment returns, that contributes to better financial health.

Contribution Margin

The amount of revenue left after deducting all variable costs, indicating the contribution towards covering fixed costs and generating profit.

Fixed Expenses

Costs that do not change in total regardless of changes in the level of business activity.